Market to extend rally

Market is likely to extend its rally in the coming week, on the back of high liquidity in the market. Strong buying support from FIIs and impressive Q2 results has boosted the market sentiment. Also stable crude oil prices will provide momentum. Nymex crude is hovering at $58 a barrel, off sharply from a record high of above $78 a barrel it had it in mid-July 2006.

FIIs have been the key drivers of the recent rally. FIIs inflow in October 2006 totaled Rs 8013 crore, compared to their inflow of Rs 5425 crore in September and Rs 4643 crore in August 2006.

However, high volatility may take place at a time when the Sensex at all time high.

Meanwhile, a large mop up from IPOs is expected in the next two months. Two large IPOs in the pipeline are Cairn India and DLF.